The distribution of power in the political system shapes the financial reporting opacity of banks. Specifically, banks located in states with senators on the Senate Banking Committee (BC senators) have greater abnormal loan loss provisions than banks in other states. The result is stronger for larger banks and banks with higher risk. In addition, BC senators have a negative effect on the likelihood of banks in their home states receiving enforcement actions, and, more importantly, this effect is stronger for more opaque banks. These findings suggest that politicians, regulators, and banks use opaque financial reporting to facilitate regulatory forbearance. Moreover, we show that opacity is a significant channel through which BC senators increase bank risk. During economic downturns, however, BC senators appear to promote bank opacity to encourage bank lending and create liquidity. Finally, the capital market does not penalize the reporting opacity of banks in states with BC senators.

政治体系中的权力分配塑造了银行财务报告的不透明性。具体而言，位于参议院银行委员会（BC 参议员）参议员的州的银行比其他州的银行拥有更大的异常贷款损失准备金。对于较大的银行和风险较高的银行来说，结果更为明显。此外，BC 参议员对其本国银行接受执法行动的可能性有负面​​影响，更重要的是，这种影响对于更不透明的银行来说更强。这些发现表明，政治家、监管机构和银行使用不透明的财务报告来促进监管宽容。此外，我们表明，不透明是 BC 参议员增加银行风险的重要渠道。然而，在经济低迷时期，卑诗省参议员似乎提倡银行不透明，以鼓励银行放贷并创造流动性。最后，资本市场不会惩罚有 BC 参议员的州的银行报告不透明。